Adobe 2006 Annual Report Download - page 86

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86
length of time that individual securities have been in a continuous unrealized loss position, at December 1,
2006:
Market values were determined for each individual security in the investment portfolio. There were
278 securities in total which had market values less than amortized cost. These securities were comprised
primarily of state or municipal bonds.
In determining whether the decline in the value of these securities was temporary we considered the
following factors:
The length of time and the extent to which the market value has been less than cost;
The financial condition and near-term prospects of the issuer;
Adobe’s intent and ability to retain its investment in the issuer for a period of time sufficient to
allow for any anticipated recovery in market value.
Our analysis led to the following conclusions:
The magnitude of the unrealized losses is such that they could be reversed with a modest change
in interest rates.
The probability that any of the issuers of these securities would be unable to meet its obligations to
meet principal or interest payments is negligible.
Based on both the length of time and the extent to which the market value has been less than cost
and the financial condition and near-term prospects of the issuer, we concluded that none of the
unrealized losses at December 1, 2006 constituted other-than-temporary impairment.
See Note 1 for our policy on recording other-than-temporary declines in our marketable equity
securities. We recognize realized gains and losses upon sale of investments using the specific identification
method. See Note 6 for net realized gains from the sale of our short-term investments and losses related to
other-than-temporary declines in the fair value of our marketable equity securities.
The following table summarizes the cost and estimated fair value of current debt securities and money
market mutual funds, classified by the stated maturity of the security. A significant proportion of securities
classified as “due after three years,” based on the stated maturity, have structural features that allow us to
sell the securities, at par, in less than three years.
Cost
Estimated
Fair Value
Due within one year ............. $ 1,506,167 $ 1,505,007
Due within two years ........... 410,184 409,656
Due within three years ......... 175,658 175,281
Due after three years ............ 129,680 130,038
Total ................................. $ 2,221,689 $ 2,219,982
Less Than 12 Months 12 Months or More Total
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
State and municipal bonds ............... $ 311,847 $ (399) $ 402,032 $ (2,701) $ 713,879 $ (3,100)
United States Treasury notes............ 69,563 (53) 1,977 (34) 71,540 (87)
Corporate bonds............................... 30,698 —
—
—
—
30,698 —
Obligations of foreign sovereigns .... 9,997 (6) —
—
9,997 (6)
Total ............................................ $ 422
,
105 $
(
458
)
$ 404
,
009 $
(
2
,
735
)
$ 826
,
114 $
(
3
,
193
)